Indy without Lilly, the 500?

February 2, 2010
Back to TopCommentsE-mailPrintBookmark and Share

Two unrelated announcements last week in Indianapolis continued story lines that aren’t improving with the passage of time.

The biggest eye-opener was Tony George’s sudden shutdown of Vision Racing, the Indy Racing League team. By pulling his car from the league, prospects for fielding a full slate of 33 cars to qualify for the Indianapolis 500 got that much harder.

Earlier the same day, Jan. 29, Eli Lilly and Co. reported a decline in operating profit in the fourth quarter. But the news about its Effient blood thinner was worse. Sales of Effient, Lilly’s newest drug and one of the company’s hopes for surviving an upcoming string of patent losses, plunged and prompted investors to sell Lilly stock.

In isolation, neither event was significant. But bad news out of both Indianapolis Motor Speedway and Lilly is becoming disquietingly common.

The cachet, the “holy ground” aura of Indianapolis Motor Speedway is fading. George’s announcement was the latest in a string of setbacks going back to the early ’90s. Lilly is losing traction, too. The company has unloaded thousands of workers, and its stock is trading at 1997 levels. Analysts continue to question the future of big drug companies as they struggle to find new products to sell.

So, let’s ratchet up the discomfort for the sake of argument. What if both pillars tip further? Or topple entirely?

Several years ago, the notion of even a diminished Speedway or Lilly would have been absurd. Now it isn’t, says Dan Knudsen, an Indiana University geographer who has studied economic development and keeps an eye on Indianapolis.

Knudsen says Indianapolis should brace for the Speedway going out of business within a few years. Open-wheel racing has been losing popularity, and young people in particular don’t seem to care about it. Imagine the track as a type of empty Roman Coliseum, he says.

Lilly’s prospects are brighter, Knudsen believes. The nation will always demand health care, so the company probably will find a way to capitalize and stay in business, if at a reduced scale. “As long as people die—and people don’t want to—Lilly is going to be fine,” he says.

Even if Lilly were to be acquired and broken into pieces, many of the pieces would be snapped up by other life sciences companies. Some Lilly plants in Indianapolis might fall into hands like Cook Group in Bloomington or Illinois-based Baxter Healthcare. So, Indianapolis would lose Lilly’s corporate largess but other companies would latch onto its highly trained employees.

Knudsen goes so far as to say Indianapolis wouldn’t miss the Speedway or Lilly as much as most locals might think. Bloomington bounced back just fine after the RCA television plant closed several years ago, he reminds.

Indianapolis has become highly attractive to professionals, Knudsen says. Downtown is now a sprawling campus, and the downtown is part of a larger campus that is Indianapolis. Indianapolis has done a remarkable job of shifting away from manufacturing to health and information, and the trend will continue well into the 21st Century, he says. The expansion of Indianapolis hospital networks throughout the state is just one sign of the city’s prosperity and influence.

“Indianapolis in essence is extending itself,” Knudsen says.

What do you think about Knudsen’s assessment? Is he too optimistic about Indianapolis? Too pessimistic about the Speedway and Lilly?

What are the odds of the Speedway and Lilly pulling out of their respective downward spirals?

 

ADVERTISEMENT
  • Speedway/Lilly
    An IU Geographer whom has studied economic development. Please! Should be fodder for his own blog, not represented as viable onward thinking.

    Honestly, if we as a capitalist nation would spend less time on theories, polls, studies, and even less wasting taxpayers money with grant funding, perhaps these same people could get busy and do something, produce something, make a real difference.

    Subjectivity wasted by a University. Let him get a productive employment opportunity and save the taxpayers a smidge off their tuition.

    For what it's worth, both home grown institutions will find a way to survive if the government will leave them and us alone. That is, of course, if any of us survive with the current and swelling national debt load.

    Good grief......
    • Versus
      0.14 ratings, lowest 500 attendance since WWII, lowest 500 TV ratings since live TV began (1986). 10 year TV contract on unwatchable TV network with DECREASING Household penetration.

      Even Vision Racing DEAD. Bull Riding CEO. Everythings coming up roses! NAAAH, no way it could happen. LOL
      • Speedway
        The statement about Indianapolis Motor Speedway potentially going out of business in a few years is just absurd. Certainly this isn't the best of times between the economy and open wheel racing not being what it once was, but this statement is just off the deep end and seems to be there for shock value.

        They are still drawing enormous numbers of people to the 500 and Brickyard. Obviously, they would like to sell every event out but they are still profitable events for IMS. They don't come with the enormous sanctioning fees that F1 did that require selling out or coming close to break a profit. Now, could IMS sell to someone? Yes. Could the IRL go under? Yes, but something else would come along to replace it. The thing that this guy is missing is that even if the IRL and 500 ceased to exist (and the 500 won't just go away), the Brickyard alone would still keep the place open as it's one of the biggest crowds on the NASCAR circuit and NASCAR isn't going away.

        Even in the one of the worst economies in decades they are still drawing at least 350,000 people to the Brickyard and 500 combined right now. And, that is probably a very low estimate. The 500's attendance drop appears to have leveled off with recent crowds the same or bigger than prior years. NASCAR was selling very well prior to the economic downturn. We are not talking about a facility that is only 40 or 50 percent full for these races. We are talking about the difference between being sold out and maybe 80 or so percent full.

        I wouldn't disagree with the idea that the 500 may never be what it once was and perhaps the popularity of NASCAR has peaked but there are still a ton of people showing up at IMS for those races even in this economy. That consumer demand will continue to be served at IMS for years to come. Perhaps not by the Hulman/George family but if they ever want to get out there will definitely be interest in buying IMS.

        Now, as for Lilly... that's a far more likely and scary situation from an economic perspective. While IMS certainly provides employment in Indy and brings money into town it's not essential in the way Lilly is. Losing Lilly would be far more devastating than any absurd notions of the speedway just being bulldozed.

        The Bloomington comparison seems strange as Indiana University provides a buffer for their economy with such a huge portion of the population employed there. Especially when you consider the percentage of "good" jobs in Bloomington that IU accounts for.
      • The solution is obvious!
        The people of Indianapolis simply need to appoint Tony George as their Mayor. Now that he is done saving open wheel racing and securing the future of the 500, saving the city should be easy peasy.
      • The IMS is in Speedway!
        I thought it was interesting how Knudsen's opinion was that Indianapolis will do just fine without the Speedway. As a geographer, I would think he would know that the Indianapolis Motor Speedway is within the Town of Speedway, not Indianapolis. The Town of Speedway, however, definitely has an interest in the future of the track. Without the tourism it brings to "Speedway," our town redevelopment would not be as vibrant and promising. The IMS is the cornerstone and a critical piece to increasing business development and tourism year round, not just during racing events.
      • Norm,

        Are you jealous of the hits Anthony gets when he posts on the IRL? is this all iu professors have to do with their time? Sounds like the hypotheticals that ESPN was doing today like what if Drew Brees had gone to the Dolphins? i mean we could play this all day. What if Indy becomes a permanent stop on the Super Bowl rotation, what if Indy annexes Carmel, What if Bill Gates moves Microsoft here? Tell the iu geographer to go play with his maps.
      • Good Job Norm
        Keep using this blog to help forecast business futures. Remember....the truth will set everytone free. Some don't want to see the truth or for you to report it. Thats' how the 500 and IRL got to this point.
      • Hopefully his crystal ball is better than the cloudy thing you have been using Chief.

        There is a difference between truth and speculation, but I would never expect you to understand that.
      • Everything is Speculation...
        ....until it becomes true. I understand that.

        Speculation: IRL will be good for AOW (1994).

        Truth: IRL ruined AOW racing (2010).
      • Truth, then and now. cart was rolling downhill when the split happened. It hit the wall and exploded a couple of times even with the great business model you all claim they had. If not for IRL, OW would have died with it.
        • Pure speculation
          Pure speculation on Indyman's part. But this part is true...hindsight is 20/20 with a bit of revision with every breath he takes.

          $600 million?
        • karma
          In the case of the 500* and the dysfunctional Hulman-George cabal, who cares and good riddance. Lilly would be a big loss. Lilly employs thousands of people in Indianapolis and IMS only employs Hulman George family members and an ever shorteneing list of Tony lackeys. Lilly has done more for this city and the world than the hillbillies at 16th and Jonestown will in ten lifetimes.
        • Indy 500
          Brett,

          TG is gone in all facets. Can you not lay down your bitterness long enough to see that the people still involved are trying to make something positive out of the mess they were left with? Or have you been hanging out with Punxatawny Phil so long you continue to see your negative shadow everywhere?

          Let it be, perhaps they'll succeed, perhaps not. But kudos if they do. And if you can't find it in yourself to move on and cheer them on, they why don't you crawl back under the rock you came out from under?

          Enough is enough.......
        • Check the lugnuts...
          ...the wheels are coming off!
        • Knudsen's Knuts!
          Ok..... Let's "back the truck up,here". Dan Knudsen's comments that the IMS will be gone in a few years coupled with a likely demise of Lilly is one thing. To say that Indianapolis wouldn't miss it that much is bazaar and, in my opinion, irresponsible. Couple the 100 years of automotive development and racing with the incredible, neh, incalculable difference Lilly has made in this community, and it boggles the mind that a man purporting to have the credentials of a geographer and a student of economic development could make such a statement. These firms were not built on soft clay and a few aspirin. The men and women behind these firms have spent generations not only delveloping important and saleable products but investing time, energy, and resources in seeking new and better ways to improve our health and provide new technologies that test our imagination, create new jobs, and provide a mountain of enjoyment to millions.

          It is fair to say that Lilly's economic struggles--spotlighted by the fact their patents on some very important and hugely profiable products run out in 2011--are making Lilly adjust their strategies on how to keep the revenue coming. Yes, the IMS has concerns. The world of auto racing is more diverse, costly, and much more competitive than ever. Add to those challenges the current economic down turn, and it is safe to say the IMS has big challenges ahead. However, to take the dump truck filled with Lilly and IMS employees together with their assets to the land fill is both sophomoric and just plain stupid.

          In short, Mr. Knudsen, get a grip. Your thesis looks at the rising water of a potential heavy storm and assumes that those caught up in it don't have a vessel to weather it, nor the constitution to seek ways to make it to shore safely.

          Even you know, Dan that Indanapolis's location on the world map is not adjacent to the Grand Canyon. We won't fall in. We're in the heartland, Dan. We're stable, rock solid, competitive with a history of success. Did you hear that, Dan? We will compete and achieve. We will Dan; we will.

        • Bob
          Nice post Bob. But, just like other things, there are warning signs that are NOT just based on the US economic situation.

          The declining Indy 500 and the inter-squabbling within the Hulman family have de-stabilized the AOW sport. ROI is low and prospects are no hopeful for the future.

          New Madrid fault also issues warnings too...not if but when. Just like a catastophic earthquake in Indy can occur, so can the 500 go out of business. And it's resident will recover and survive too.
        • Constant change
          The Indianapolis 500 (there is no Speedway 500) was an all-day event in the 1960â??s. In the 70â??s people planned their life around the traffic and events during the 30 Days of May. Today the Race Day seems to be â??just another dayâ?? in May. The conflict between IRL and NASCAR and the attempt at Formula 1 began the decline of The 500â??s importance in racing. I see it more likely reviving as an auto testing race, but gone are the glory days of the Indianapolis 500. The media â?? cable and internet â?? has forced the world to out-grow individual events. It will become a footnote in transportation history, a museum for 4th grade field trips, a venue for corporate team-building events, and perhaps a Memorial Day auto race. It is true that Indianapolis worked hard reinventing itself from an over-grown farm town to a mid-sized city of the 21st Century. Loss of any Corporate Headquarters is significant, and should Lillyâ??s headquarters move for any reason, it will be a loss to Indiana as well as to Indianapolis. More importantly, it would mean the loss of significantly more jobs and more â??brain-drainâ?? from Purdue, Rose-Hulman, IU, and Notre Dame as well as several other fine institutes of higher learning in Indiana, and impact the Indiana tax base.
          This is an area where Geography and Sociology overlap. Geography studies the earthâ??s surface including the effects of population, land use, and industry, and Sociology studies the function of society in relationships, institutions, etc. The Indianapolis 500, the Speedway and Lilly fit the criteria for both areas of study.
        • Grammar
          >

          In English, "who" is used for the nominative case and "whom" is used for all others.
        • I can't resist
          >

          Bull + roses? ;)
        • simple demographics
          Realistic is the demographic of motorsports and the extension of motorsports beyond IMS. Simple is the fact that IMS is historic, has survived hords of economic downturns and is likely to survive because of the demographic of the racing culture. Furthermore, the likely geographic footprint within central Indiana expands beyond 16th and Georgetown. Note that over 400+ business are licenced within the state with a robust economic elk uncommon to most. As a industry north of $19.1 billion in gross revenue and growing, the aspect of failure is in the attitudes of those who really don't relish the thought of enterprise and knowlegable that IMS is an event and only part of the central Indiana motorsports landscape as is the IRL. May IMS rise to the occasion and continue to lay rubber down in all four turns. Also, note the likeness of success in the bean fields just west on 74 ... yes, motorsports is robust and growing ... ask any of the 9,000 member companies that are members of the Specialty Equipment Market Association (SEMA) or any fan who drives scads of miles for the pure value of clean entertainment. Cheers 'n gears to those believers and the motorsports clan at IUPUI.
        • Racerdick
          RD, you state an extremely good case for the sake of the industry. If the haters were to roll that up and smoke it, they would be choking on the smoke until all of their lame thoughts and hate vanished.

          Puff puff........
        • Hmmm
          Wheels are falling off over at the speedway.

          Good thing industry hasn't yet tied it's economic viability to the speedway yet (again). Too unsettled, which leads to the credibility of this report and blog.
        • I hope You're Kidding...
          CART was rolling downhill, Indyman?? Indy sold out every year - BIG attendance for Pole and Bump Days. The rest of the season with big crowds at Long Beach, Phoenix, Toronto, Michigan, etc. All of that (and most all other venues that were there in CART years) declined or disappeared under the IRL's miserable formula and Indycentric marketing. I went to many Indy 500's prior to the IRL's arrival, and those memories are good. Unfortunately, I don't think it will ever recover the mystique it had, and it's slide into oblivion (or possibly becoming a NASCAR race) are a result of the IRL architecture for American open wheel racing.
          aren't surprising.
        • I hope You're Kidding...
          CART was rolling downhill, Indyman?? Indy sold out every year - BIG attendance for Pole and Bump Days. The rest of the season with big crowds at Long Beach, Phoenix, Toronto, Michigan, etc. All of that (and most all other venues that were there in CART years) declined or disappeared under the IRL's miserable formula and Indycentric marketing. I went to many Indy 500's prior to the IRL's arrival, and those memories are good. Unfortunately, I don't think it will ever recover the mystique it had, and it's slide into oblivion (or possibly becoming a NASCAR race) are a result of the IRL architecture for American open wheel racing.
          aren't surprising.
        • IMS Marketing...dependant on Danica
          http://sports.yahoo.com/nascar/news?slug=tsn-indycargetsinontheda&prov=tsn&type=lgns

          Indy basing tix discounts on what Danica does in the ARCA race. Pathetic marketing effort and the sporting news laughs at IMS for doing it.
        • Sterling,

          You seem to be new here so I will pose my question to you. Some around here claim that the series with the cars and stars, the big name owners, the big name tracks minus one and the big name sponsors was brought down solely because of an upstart series that only real asset was IMS. That would be like a new series started around Daytona bringing down NASCAR. Without fundamental flaws in its business model, how did it happen? Name another major racing series where the team owners also control the series. There isn't any. And there is a reason for it.
        • Vision Racing doesn't count
          The answer is TONY GEORGE to all questions. He was willing to wager IMS and risk the legacy of the 500 and AOW racing to.......WHAT? WHAT? Why did any of what he did to this sport HAVE to happen? Nope. History and any review of it by ANYONE would conclude the inception of the IRL is the number one reason why the sport suffers today. LOOK IT UP.
        • Chief,

          We already have seen your prowess at dodging the question, i was giving the new guy a chance to answer it since the rest of you cannot seem to provide an answer.
        • Yes sir
          Your question is pointless. You seem to get great joy in pointing out (continually) the failures of a dead defunct AOW series. Your points are tired and essentially worthless.

          No one is suggesting the repeating of history by re-living CART or whatever you fear. The fact remains IMS is treading water and the strong powerbase that was supposed to be at it's heart is shredded in a family squabble. The success of AOW hanging in the balance...

          If one thing could come from CART's legacy it should be competition....amongst sponsors, manufacturers, drivers, teams, owners, fans etc. THAT is what has been lacking in the IRL today, and with the instability at 16th and Jonestown and the indecision by Barnhart etc. it isn't gonna get any better. That is not doging anything, it's taking the speedway at it's word and challenging them to make positive effect on the sport as a whole. You appear to want the status quo, which is NOT acceptable.
        • Wow, actually a coherrent answer from you. I am proud. Sure it took months of wading through a lot of 2 cent answers, but it is almost worth it.

          The problem with the competition aspect among tires, maufacturers and even to some point teams really does not have much depth in series racing anymore.

          Take NASCAR. Other than sponsorship, there really is no Chevy, Ford, Dodge or Toyota cars running. On Sunday, pretty much the same cars with the same engines running on the same tires will be take the green flag. About the only difference is the stickers on the cars. I think the reason for that is cost. NASCAR runs the series on the cheap side to get more cars 43 or so per event and to attract the PBR crowd. Contrast that with F1 which really does have true competition with cars that are not cookie cutter. The trade off, high dollar racing that limits it to 20 cars at most, and ticket prices that make it available only to the Perier crowd.

          Cart appeared to try to be the F1 light. Fewer ovals, more foriegn drivers, more international races and attract the wealthier crowd. It did not work for them. In the end, it was as much spec racing as NASCAR.

          The IRL on the other hand tried to stay the true American open wheel series by keeping costs low, support American drivers, on ovals in America. It survives, but has compromised many of its original ideas supposedly to attract the former cart crowd.

          SO I would argue that there is little of the competition you want in racing today. Blowing up the IRL and starting from scratch certainly will not get it. I think the best thing is for the IRL to position itself to come out of the recession with a definite business model and stick to it. I think coming up with an all new car design and if it is the wingless prototype, then so be it. I have never stated status quo is good. I think the IRL made a mistake when it started catering to the cart crowd. The IRL should have stuck to its original vision. Such is life.



        • And there's the difference between us
          I think Tony George made a mistake in forming the IRL because he never considered the overall disaterous effects on the sport as a whole with his actions.

          I respect that you say the IRL should have stayed with it's original vision. But it didn't. I'm appalled that you appear to allow this farce to continue despite your convictions. Defending a farce, in my mind, is inexcusable, which is what you are doing.

          Change for the better will not occur at the top unless the fans voice is heard too. I propose that the powers that be are hearing it loud and clear...and until folks like yourself join in to express need for change, the series will just wander about like it has all these 14 years, until it's dead. Then, you and the speedway will have no one to blame but it's self.
        • First and foremost, I am an indy booster as in Indianapolis. Anything that is good for Indy is something I support. The IRL is still good for Indy. A strong IRL will be better.

          That said, the IRL is still closer to my vision of racing then cart ever was. Cart went downhill when they started being driven by the dollar and not the racing. I truly believe that is what TG wanted to reverse. I truly believe that his heart was in the right place, that he foresaw cart, run by the owners was going down the wrong road. I think this is born out that no major racing series is run by team owners. There were just too many chefs in the kitchen.
        • Your fixation
          What's funny is the success the IRL seeks IS the success that came before it. They are not in business to FAIL. They've been a failure, but, they strive to be the best that has ever raced. Would you agree with that?

          Your argument would have weight IF CART was in some dire straits in 1994...but it wasn't. And all that you wrote is fine EXCEPT the IRL has NEVER made a penny nor been successful since it's incarnation. IRL gets credit for being the last man standing, but minus $600 million and his throne with the sport in shambles. And the worst injury record in recorded history. Some legacy.
        • Responding to Indyman
          The NFL, Baseball, Basketball etc. all are owned/run by team owners. I see no reason why CART was flawed because of that. If anything, those team owners represent a community of very (!) successful businessmen running the sport, finding money, etc. etc. Tony George was born into wealth, has little or no business savvy that's been demonstrated in a pre-IRL world, or certainly in the IRL he built.
          Given your apparent dislike of team owners controlling/voting on policy or direction of the series, what do you favor? Do you like the way things are now? Most of the same CART team owners on board, Indy reduced to a one engine/one chassis event, and a mix of street, oval and road races not unlike what CART was doing - but all on a significantly diminished scale from the CART days. All this subtraction of interest, money, whatever happened under the IRL's watch.
          I'll take the CART model. Indy - still being run with its own formulas (compatible with CART's rest of the season formula), multiple engine and chassis each race, savvy business people considering the WHOLE SERIES
          and not just worrying about the Month (er...two weeks) of May.

        Post a comment to this blog

        COMMENTS POLICY
        We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
         
        You are legally responsible for what you post and your anonymity is not guaranteed.
         
        Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
         
        No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
         
        We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
         

        Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

        Sponsored by
        ADVERTISEMENT
        ADVERTISEMENT